Correlation Between KKR Real and Franklin BSP
Can any of the company-specific risk be diversified away by investing in both KKR Real and Franklin BSP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining KKR Real and Franklin BSP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KKR Real Estate and Franklin BSP Realty, you can compare the effects of market volatilities on KKR Real and Franklin BSP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in KKR Real with a short position of Franklin BSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of KKR Real and Franklin BSP.
Diversification Opportunities for KKR Real and Franklin BSP
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KKR and Franklin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KKR Real Estate and Franklin BSP Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin BSP Realty and KKR Real is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on KKR Real Estate are associated (or correlated) with Franklin BSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin BSP Realty has no effect on the direction of KKR Real i.e., KKR Real and Franklin BSP go up and down completely randomly.
Pair Corralation between KKR Real and Franklin BSP
Given the investment horizon of 90 days KKR Real Estate is expected to under-perform the Franklin BSP. In addition to that, KKR Real is 1.17 times more volatile than Franklin BSP Realty. It trades about -0.13 of its total potential returns per unit of risk. Franklin BSP Realty is currently generating about 0.01 per unit of volatility. If you would invest 1,271 in Franklin BSP Realty on November 4, 2024 and sell it today you would earn a total of 2.00 from holding Franklin BSP Realty or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KKR Real Estate vs. Franklin BSP Realty
Performance |
| Timeline |
| KKR Real Estate |
| Franklin BSP Realty |
KKR Real and Franklin BSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KKR Real and Franklin BSP
The main advantage of trading using opposite KKR Real and Franklin BSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KKR Real position performs unexpectedly, Franklin BSP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin BSP will offset losses from the drop in Franklin BSP's long position.| KKR Real vs. Ellington Financial | KKR Real vs. Dynex Capital | KKR Real vs. Ares Commercial Real | KKR Real vs. Cherry Hill Mortgage |
| Franklin BSP vs. AGNC Investment Corp | Franklin BSP vs. Nexpoint Real Estate | Franklin BSP vs. Ladder Capital Corp | Franklin BSP vs. Apollo Commercial Real |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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